Under Thai law, when purchasing a property, one must pay property tax to the local Land Department Office in Thailand.
What is Property Transfer Tax?
Property transfer tax is a land registration tax. It must be paid when an application for the taxable transaction is made at any local land department office in Thailand such as registering changes to a certificate of title upon transfer of land and condominium to a new owner. Property transfer tax is applicable in real estate transactions in Thailand like sale of house, land, condominium unit or building. Thailand property tax includes Specific Business Tax, Stamp Duty, Transfer Fees and Withholding Tax.
How is the Transfer Tax calculated?
This is how the property taxes are calculated in Thailand:
- Transfer fee – 2% of the registered value of the property
- Stamp Duty – 0.5% of registered value. Stamp duty is only payable if exempted from business tax
- Withholding tax – 1% of the appraised value of the property or sales price, whichever is higher
- Business tax – 3.3% of the appraised value of the property if selling within 5 years. This applies to both individuals and companies.
Note: About Withholding Tax
- The Withholding Tax is a prepayment of the seller’s income taxes.
- If the seller is a company or the developer, withholding tax is fixed at one percent (1%) over the registered sale value or appraised value whichever of these two is higher.
- If the seller is a private person, withholding tax is calculated at a progressive rate based on the assessed value and the duration of the sellers ownership.
Who is responsible for paying the property tax?
Transfer fee – BUYER normally pays
Stamp Duty – SELLER normally pays
Withholding tax – SELLER normally pays
Business tax – SELLER normally pays
- When you buy second hand, the buyer usually pays all of the taxes, because it lowers the purchase price and thus the total taxes due.
- When you buy from the developer, the developer usually pays the Special Business Tax (SBT) (3.3% tax on the sales price if the seller has owned the property for less than 5 years) and splits the rest of the taxes 50/50. Stamp Duty is owed instead of the SBT if the seller has owned the property for 5 years or more.
When is the Property Transfer Tax payable?
The Land Department collects taxes payment when the deed is transferred.
How is the tax paid?
Condominium transfer tax
- This is paid at the local land office when transferring ownership of a condominium in Thailand(together with the transfer fee, stamp duty, withholding tax, specific business tax (if applicable).
Transfer tax in a re-sale of an existing condominium
- It depends on the agreement between the seller and the buyer on how they have agreed to share the cost of the tax
Transfer tax and fees in an off-the-plan condominium project set-up (new condominiums)
- The buyer of a new unit or in an off-the-plan purchase of a condominium cannot be charged more than half of the two-percent (2%) ownership transfer fee only.
All other duties and taxes
Other taxes related to the registration and transfer of ownership must be borne by the developer.
Thai Companies, Building, and Land Tax
- When the land and buildings are owned by a Thai company: the company is required to pay housing and land tax (property tax), even if the company does not receive any income out of it or does not actually operate a business.
Specific Business Tax Exceptions
Specific Business Tax applies if the seller has owned the property for less than 5 years. Stamp duty is of exemption if Specific Business Tax (SBT) is charged.
If the seller is an individual (not a company), Specific Business Tax does not have to be paid in the following situations:
- If the seller has possessed the property more than five (5) years before the transfer;
- If the seller transfers the real property to the legal heir or an heir by a will;
- If the seller transfers the real property without consideration to government agencies;
- If the seller transfers the real property without consideration to temples, churches or mosques.